Ernesto Gaytan
About Ernesto Gaytan
Ernesto Gaytan is Executive Vice President and Chief Technology Innovation Officer of SB Financial Group’s State Bank, responsible for aligning technology with business strategy, optimizing technological effectiveness, and ensuring information processing accuracy, regulatory compliance, and cybersecurity controls . He joined SB Financial on November 27, 2017, and has served in this role since that time . During his tenure, company-level performance has produced cumulative TSR indices of 87 (2022), 92 (2023), and 135 (2024) and net income of $12.5m (2022), $12.1m (2023), and $11.5m (2024) . The Compensation Committee uses BCG market data, tenure, role, and performance to set executive pay levels .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| SB Financial Group / State Bank | EVP & Chief Technology Innovation Officer | 2017–present | Leads technology strategy alignment, operations optimization, audit/security oversight |
Fixed Compensation
| Metric | 2018 | 2019 | 2020 | 2023 | 2024 |
|---|---|---|---|---|---|
| Base Salary ($) | $186,609 | $204,204 | $217,039 | $234,093 | $242,613 |
| Bonus ($) | $0 | $0 | $0 | $0 | $0 |
| Stock Awards ($) | $35,360 | $29,440 | $21,040 | $27,021 | $21,556 |
| Non-Equity Incentive ($) | $26,612 | $19,360 | $73,150 | $15,242 | $54,624 |
| Change in Pension Value & Deferred Comp ($) | — | — | — | $25,000 | $25,000 |
| All Other Compensation ($) | $5,770 | $10,993 | $12,741 | $14,745 | $14,307 |
All Other Compensation detail:
| Item | 2023 | 2024 |
|---|---|---|
| 401(k)/HSA Match Contribution ($) | $8,998 | $9,707 |
| Auto Allowance ($) | $1,419 | $1,727 |
| Whole Life Insurance Benefit ($) | $1,452 | $0 |
| ESOP Contributions ($) | $0 | $0 |
| Social Dues & Membership ($) | $2,876 | $2,873 |
| Other ($) | — | — |
| Total All Other Compensation ($) | $14,745 | $14,307 |
Performance Compensation
Non-Equity Incentive Plan opportunity levels (as % of base salary):
| Executive | Threshold | Target | Maximum | 2024 Actual (% of Salary) |
|---|---|---|---|---|
| Ernesto Gaytan | 12.5% | 25.0% | 50.0% | 22.81% |
Annual incentive metrics, targets, and payouts:
| Metric | 2018 Weight | 2018 Target | 2018 Actual | 2018 Payout ($) | 2019 Weight | 2019 Target | 2019 Actual | 2019 Payout ($) | 2020 Weight | 2020 Target | 2020 Actual | 2020 Payout ($) | 2024 Weight | 2024 Target | 2024 Actual | 2024 Payout ($) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Diluted EPS | — | $1.45 | $1.51 | $9,800 | 15% | $1.56 | $1.51 | $5,417 | 15% | $1.62 | $1.96 | $15,675 | 15% | $1.79 | $1.72 | $6,734 |
| IT/Operations Audit Performance | 100% | 85% | — | $0 | 30% | 90% | 54% | $0 | 30% | 90% | 74% | $0 | 40% | 90% | 90% | $23,945 |
| Return on Assets (%) | — | 1.22 | 1.23 | $7,467 | 20% | 1.20 | 1.16 | $7,143 | 20% | 1.09 | 1.29 | $20,900 | 15% | 0.92 | 0.84 | $0 |
| Efficiency Ratio (%) | — | 70.50 | 69.83 | $9,345 | 20% | 69.50 | 70.78 | $6,800 | 20% | 70.50 | 65.25 | $20,900 | 10% | 71.50 | 75.33 | $0 |
| Common Stock Price vs BKX | — | $19.50 | $16.45 | $0 | 15% | 100% | 61% | $0 | 15% | 100% | 147% | $15,675 | — | — | — | — |
| Bank Deposit Balance Growth ($) | — | — | — | — | — | — | — | — | — | — | — | — | 20% | $45,342,500 | $62,518,442 | $23,945 |
| Total Cash Reward ($) | — | — | — | $26,612 | — | — | — | $19,360 | — | — | — | $73,150 | — | — | — | $54,624 |
Equity-based awards and vesting:
- Equity grants are restricted common shares with four-year ratable vesting (25% per year, beginning one year from grant) under the 2017 Plan; no stock options have been granted in more than 15 years .
- 2024 grant (issued Feb 3, 2025 for 2024 performance): 920 restricted shares to Gaytan; grant date fair value $23.43 .
- 2023 grant (issued Feb 3, 2024 for 2023 performance): 1,720 restricted shares to Gaytan; grant date fair value $15.71 .
Equity Ownership & Alignment
Beneficial ownership and guidelines:
| Holder | Shares Owned | ESOP Shares Included | % of Class |
|---|---|---|---|
| Ernesto Gaytan | 17,253 | 803 | <1% (out of 6,534,918 shares) |
| Ownership Guidelines | Minimum 10,000 shares for executives/directors; all are currently in compliance |
Outstanding unvested equity at 12/31/2024 (market value computed at $20.91):
| Tranche Vest Date | Unvested RS Shares | Market Value ($) |
|---|---|---|
| Feb 5, 2025 (a) | 2,275 | $47,570 |
| Feb 5, 2026 (b) | 1,525 | $31,888 |
| Feb 5, 2027 (c) | 775 | $16,205 |
| Feb 5, 2028 (d) | 430 | $8,991 |
Alignment policies:
- Anti-hedging policy prohibits margin purchases, options (puts/calls), and short-term trading by insiders .
- The company maintains a Clawback Policy (adopted 2024) compliant with Section 10D and Nasdaq Rule 5608, enabling recovery of erroneously awarded incentive compensation over a three-year lookback in the event of restatement .
Employment Terms
| Term | Disclosure |
|---|---|
| Change-of-Control Agreement | Amended and Restated COC Agreement dated Nov 1, 2022; rolling 36-month term, auto-extends annually; remaining term 24–36 months |
| COC Cash Multiple | 2.0x “Annual Direct Salary” (highest base rate in prior 36 months) upon qualifying termination within 6 months before/24 months after CoC; plus 24 months of COBRA and insurance premiums; accrued obligations |
| Non-Compete / Non-Solicit | Prohibits competition and solicitation during employment and for two years post-termination (unless termination occurs in connection with a CoC); confidentiality obligations apply |
| Potential Payments (12/31/2024 scenario) | Termination w/o cause under CoC: $492,064 lump sum + $51,317 COBRA + stock value $93,050; Death: $492,064 group term life + $250,000 split-dollar benefit + stock $93,050 |
| Deferred Compensation | Agreement dated Dec 15, 2023: fixed payout over 10 years at retirement; option for one-time distribution after seven years for children’s education; applies termination provisions consistent with executive retirement benefits |
| Split Dollar Life Insurance | Agreement dated May 2, 2022; beneficiaries receive up to $250,000 prior to separation; option to purchase policy at cash surrender value upon termination of agreement |
| SERP | No SERP amounts disclosed for Gaytan (table shows “—” for SERP rows) |
Investment Implications
- Strong pay-for-performance linkage: Annual incentives incorporate financial (EPS, ROA, efficiency) and operational IT audit outcomes; 2024 payout at 22.81% of salary reflects mixed financials but positive IT audit and deposit growth execution .
- Retention risk appears mitigated: COC protections (2.0x salary, benefits), deferred compensation, and ongoing vesting through 2028 support retention; absence of options reduces near-term exercise pressure; upcoming RS vest tranches historically staggered over four years .
- Alignment: Minimum 10,000-share ownership requirement and anti-hedging/clawback policies align incentives with long-term shareholders; no pledging disclosure and no option repricing noted .
- Execution focus: Persistent weighting to IT audit and operational metrics underscores Gaytan’s role in technology governance and operations; company TSR and net income trends contextualize overall performance during his tenure .